Seymour Crawford (Cavan-Monaghan, Fine Gael)
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Question 4: To ask the Minister for Agriculture and Food her views on whether the milk quota exchange system is not providing a fair opportunity for farmers to either buy or sell; her further views on the fact that in small co-operatives or dairies no milk has changed hands and in some of the larger dairies only a small percentage has transferred; and her plans to restructure the system and take account of the anomalies that are preventing both willing buyers and sellers. [9232/07]

Mary Coughlan (Donegal South West, Fianna Fail)
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The first milk quota trading scheme ran successfully in January and resulted in 120 million litres of quota being offered for sale, with 73 million litres traded. The second stage of the scheme has a closing date for applications of 9 March 2007 and the exchange will be run in April. The trading scheme, which has replaced the restructuring scheme for the 2007-08 quota year, allows milk producers the opportunity to bid for the volume of quota required to meet the development needs of their farm enterprise at a price that will generate a commercial rate of return. In essence farmers may decide on the amount of quota they wish to buy or sell and the price at which they are willing to trade quota. Some 70% of the total amount of quota offered for sale will be transacted on the market exchange and will be sold at the market clearing price. I am satisfied that the new milk quota trading system will create a more open market system of transferring milk quota and will allow farmers much greater freedom to make choices about how milk quota should be transferred, affording them far greater scope to decide the volume and price of quota they wish to buy.

The milk quota regime in Ireland is operated at milk purchaser-co-operative level in accordance with the regulations set by my Department. Under the old restructuring scheme, a primary condition of the scheme was that quota sold into the restructuring pool by a co-operative's suppliers was available for purchase by them in the first instance. The new trading scheme is also operating at milk purchaser level and, as under the old scheme, anomalies arise in smaller co-operatives where there is excess supply of quota. However, I have made provision in the new scheme to allow milk purchasers to group together for the purposes of trading quota, without having to form a registered group of purchasers under the milk quota regulations.

Deputies:

I encourage the Deputy to keep his questions as brief as possible.

Seymour Crawford (Cavan-Monaghan, Fine Gael)
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That should apply to both sides of the House.

Last week, in reply to a parliamentary question I tabled, the Minister outlined the amount of milk quota that had changed hands over the past six years. In 2006 the amount traded fell by 15 million from 177 million litres compared with 2005. There were great expectations that the new quota system would have a dramatic effect last year but farmers did not offer their milk quota for sale because the Minister announced the restructuring scheme on a Friday and then announced her new proposals the following Sunday. Does she agree it is totally unacceptable that no milk changes hands where a supplier brings his milk to a co-operative if it does not have a computer system? Departmental officials advise that by grouping co-operatives, the issue would be resolved. How can she explain then that only 11% of the available quota transferred in Lakeland Dairies' catchment area, which is a large co-operative?

I refer to the serious issue of a technicality. The document on the sale and purchase of quota states a farmer must dispose of all his quota when it is offered for sale, which means a farmer could lose 30% of its value. A farmer who does this will also sell his cows. If his quota does not sell, how can he re-create milk so that he can lease the remaining 70% for the rest of the year? Will the Minister accept this is a mess?

Mary Coughlan (Donegal South West, Fianna Fail)
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It is not a mess. The differential ranges from 11 cent and 24 cent per litre under the new scheme. One of the criticisms has always been that the Department interferes too much in the commerciality of farming. This proposal will address that issue.

All the farming organisations were party to the review and they were more than happy with the outcome. Now that farmers are aware of the table outlining the differential, they will establish that they fall within the percentile and they will be able to pay for the quota that becomes available. My Department has received 2,000 applications under this scheme and there will be twice or three times as many applications under this scheme than under previous schemes because farmers have more information and a better understanding of the regime. It will be more than beneficial to farmers and I do not accept, therefore, it is a mess. I outlined that farmers had to make a decision on the basis of price, on what is happening in Europe and what the commissioner had to say and on the review that will take place in 2008. This scheme is a good mechanism and the outcomes I expect will be reflected when it closes. It will be beneficial to allow farmers to sell and to allow others access to purchase quota.

Deputies:

The Deputy may ask a brief supplementary question. We have one more Priority Question to deal with and time is pressing.

Seymour Crawford (Cavan-Monaghan, Fine Gael)
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The Chair is holding everything back.

The bottom line is the scheme has changed the system dramatically. The Minister stated the differential ranges between 11 cent and 24 cent. Will she guarantee that milk quota will continue to be treated as it is currently? Does she agree there will be legal difficulties because one farmer will be paid 24 cent a litre, depending on where he lives, and another will not? How will that be resolved in the long term?

Mary Coughlan (Donegal South West, Fianna Fail)
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Ring-fencing will continue as part of Government policy. That has benefited the west and north west and it has permitted farmers to scale up and become competitive. We must move on in this sector because it is hugely important. We need to change and to afford farmers the opportunity to scale up. Perhaps the Deputy wanted to forget about our priority, which is young farmers. They must have priority. We must also examine lost leases, which is also a priority within this pool. The number of applicants under this scheme will increase compared with previous schemes and, on the basis of previous information and assessment discussions that have taken place within farming organisations and co-operatives, people will manage and work within the new system. The percentile between 11 cent and 24 cent will result in people staying in the system.